Global Bankers Meet To Resolve A Two-Speed World Economy
LINDA WERTHEIMER, HOST:
The world has felt like an increasingly unstable place to inhabit these past few months, with the rise of the self-proclaimed Islamic State in Iraq and Syria, the encroachment of al-Qaida in Yemen and continued chaos in Libya. But how does all this affect the global economy? World leaders are gathering in Washington, D.C., this weekend for the International Monetary Fund and World Bank annual spring meetings. David Rothkopf, CEO and editor of the Foreign Policy Group, joins us from Foreign Policy's offices in Washington. Welcome, David.
DAVID ROTHKOPF: Hi.
WERTHEIMER: You've been to a few of these gatherings. What do the IMF and the World Bank do when they meet?
ROTHKOPF: Well, I think two things happen at these meetings. One is a set of formal meetings, which are actually much less important than the informal conversations that occur in the corridors around the meetings because it's in meetings like this that the conventional wisdom of global markets gets formed.
WERTHEIMER: Do you think they're feeling pretty good about what's happening or pretty bad?
ROTHKOPF: Right now, virtually every country in the Middle East is at war, with the exception of Oman. Typically, what we would've thought a number of years ago is that this would make oil prices go up and that this would shock global stock markets. Neither of those things has happened. In fact, oil prices have largely gone down, and global stock markets have largely ignored this. And I think that means that some of the areas where the unrest is greatest are places that can now boil over without having great effect for developed markets and investors. And that's not such a good thing because it means that the leaders in those countries who depend on those investors can more easily ignore those crises. And we have a kind of two-speed world.
WERTHEIMER: You know, we find in the United States that one of the most unsettling things for our stock market often is good news. So what about the possibly good news that Iran might give up its rush to nuclear weapons?
ROTHKOPF: Well, it depends on your perspective. I think the prospect of Iran seeing sanctions lift could have the effect of putting a significant amount more oil into global oil markets. Another potential consequence of the Iran deal, of course, is that the neighbors of Iran are threatened by it. And if they start confronting the Iranians then you could see heightened risk of conflict. And at some point, the markets can't ignore that conflict.
WERTHEIMER: Well, now, one of the most interesting areas of tension recently is between the U.S. and Russia. How do you think that plays into all of this?
ROTHKOPF: Well, I've spoken to a lot of investors and investors' groups recently and if there's one area of risk that they have flagged it is the possibility that a miscalculation between Europe and Putin leads to a heightened conflict. That could then hit world markets dead on in ways that could really be debilitating.
WERTHEIMER: David Rothkopf is the CEO and editor of the Foreign Policy Group. Thank you very much for talking with us.
ROTHKOPF: It's been my pleasure. Transcript provided by NPR, Copyright NPR.